How to determine social media's real impact on your business

"We got 1,000 new Facebook Likes this month! And our Twitter followers doubled! Not to mention, we received a bunch of positive comments on our blog!"

So what?

We're in the midst of the business gold rush to use new media such as social networks, blogging and other online content-sharing forums. Starry-eyed business professionals read and hear the success stories of their peers, and can't wait to get similar results. Unfortunately, what happens is that they rush in without a plan, and after six months are disappointed that they're not seeing business boom.

But the reason they're not seeing results may be because they don't know what they're looking for and they don't know what to focus on. Any worthy marketer knows that if they plan on evaluating their efforts at some point, they need to first define what success is and then define how they'll measure that. Measuring the number of Facebook "Likes," Twitter followers or YouTube video views is a worthwhile effort, but really only gives you an understanding of your potential reach. It fails to indicate if these people are actually engaged, and ultimately if they're taking action and becoming business leads or customers.

At the end of the day, many businesses will define success in terms of sales. Sales are a worthy measuring stick, but they're not the only thing that can (or should) be measured. While most business operations and marketing efforts affect sales in some way, there are typically other objectives that can be impacted as well. For example, a business may have an objective to reduce customer service calls in their call center (or perhaps reduce the average amount of time spent per call). By using social media as a customer service tool, they may be able to measure an impact on that call center objective.

Strategic users of new and social media will start with a list of business objectives. Business objectives can be related to revenue, lead generation, customer service, branding and more. Review the list of business objectives and make a decision about which objectives you believe you can impact with new media efforts. Once the objectives are identified and the strategy to impact those objectives is developed, it's time to measure your efforts. It helps to know the base data before you begin so you can determine if your new media efforts are actually having a positive impact.

To continue with the call center example, it's important to know the current number of calls the call center receives (having that data month over month is even more helpful). It's important to know how many customer service issues are currently resolved online. It's important to know the length of the average phone call. Once a baseline of data is established, it's time to begin your new media efforts. Keep a running list of those efforts so that you can spot a correlation between your social media campaign and the objectives you're seeking to impact. It does take experience, insight and critical thinking to connect the dots. Data by itself has very limited value. The value comes from being able to see trends, connect cause to effect and ultimately make decisions about if your new media efforts are affecting the business objectives.

So how do you do that? Look for correlating spikes of activity, to start. If you were to overlay your new media efforts with the objectives you're measuring, are any correlations revealed? Perhaps when you shared a sneak peak of a new product on Facebook, you saw an increase in web traffic and an increase in opts ins for email communication. It can stand to be concluded that your efforts increased your database of leads. Think that might just be a coincidence? Fair enough. Try again, and again, and again and measure to see if you have similar results. Are you seeing a trend? Can you reasonably conclude that the return on your time investment is an increase of 500 (for example) new business leads? What is the value of a business lead to your organization? If you don't know, you should. You should know the average value of a business lead and the average value of a customer. If you're creating leads through new media efforts, you should be able to articulate the value of that effort. This is how you answer the ever important question, "So what?"

"We have 5,000 Facebook Likes."

"So what?"

"Well, last month we saw that the Web site had 2,500 visits come through directly from Facebook posts. Of those visitors, 40 percent signed up to receive email promotions from us. We emailed them targeted messaging and 50 percent went on to make an online purchase with an average transaction value of $100. So, our Facebook efforts resulted in $50,000 in sales."

Wouldn't it feel great to respond in that way? Even if you don't start with these kinds of results, you can still be able to answer the question. Reach by itself has a very limited value. But if you know what to look for and what to measure, you can potentially track the value of your efforts. And that's ultimately the other question marketers need to be able to answer about any of their marketing efforts what's the return on investment? And if you want to increase your return on investment, you need to identify what's working and what's isn't. Most people won't have unbelievable results at the inception, but by measuring what's working and what isn't you're able to optimize your effort so that you do get results. If Facebook isn't actually driving visitors, leads or customers, wouldn't you like to have the data that shows you that you're wasting your time, or need to change something? If you're not measuring and evolving you're doomed to be fooled into thinking that your reach is a sign of success (when, in fact, you have no idea). If you are measuring and evolving you cannot only track your ROI, but can improve it. So, define success, develop a plan for impacting your business objectives and how you'll measure results, analyze the data and optimize your hard work.

Mike McDowell is the director of Web and digital at KPS3 Marketing and teaches "Inbound Marketing Analytics and Metrics" for the University of Nevada, Reno's Extended Studies program. Contact him at 775-686-7439 or through kps3.com.